Should Your Small Startup Get a Group Medical Plan?

The answer is a resounding yes, according to ChooseWhat.com's Strategies Officer, Gaines Kilpatrick.  Read on to find out why signing up for a group medical plan for your start-up company is a better option than getting individual health insurance or not offering any health benefits to employees.

Two full-time employees are considered a group.

Small business owners typically ask, “When is my company eligible for a group plan?” and “When should I get one?”  You are eligible for a group plan when your company consists of two people, whether it's two business partners or one business owner and one employee.“If it's you and your secretary, you should go ahead and get a group medical plan,” says Gaines.

Group medical plans cost the same or less than individual plans and have much better coverage.

When Gaines and ChooseWhat.com co-creator Leo Welder became business partners, they opted to get a group plan for just the two of them because it ended up being cheaper and providing better coverage than individual health insurance.  Gaines attributes this, in part, to their demographics (i.e. young, single, healthy, male) that affect the premiums for health insurance.Gaines recommends that start-ups consisting of a few relatively young and healthy people should sign up for a group plan as soon as possible, but he also advises you not to worry about not fitting into specific demographics.“There are laws protecting groups and mandating coverage of things that most individual health plans aren't likely to cover, such as pre-existing medical conditions or maternity,” he says.  “Group plans definitely give you distinct advantages.”

Employers have to contribute at least 50% of the cost for group medical.

Before you decide to provide health insurance for your employees or not, consider your industry:

• Do you have or expect to have high or low turnover?
• Do your current/future employees have a high or low skill level?  Are they easily replaceable?
• Do you want to attract and retain the top employees with health benefits? Or is it more about keeping costs low?

Answering these questions will help you get a better sense of whether providing health insurance is something your company is prepared to do.  Also, keep in mind that you're obligated by law to contribute at least 50% of the cost for group medical. But, you can also set company-specific health insurance policies, such as whether you'll cover spouses and dependents and up to how much you're willing to cover.

The forms are easier for group medical plans than for individual plans.

Gaines says that individual health insurance forms are fairly complicated and tend to delve deeper into your background and medical history than group health insurance forms, lengthening the approval time and making it more difficult to get approved.Gaines also advises business owners to use a broker (all the major health insurance providers work with them) to find the right health plan and provider for their companies.  As you get new employees, you'll need to re-evaluate your group plan based on your employee demographics and renew or sign up for a new plan.  A broker will handle this process for you and figure out the best plan/provider for your company's needs.  Brokers also keep up-to-date with new laws and tax credits that relate to your medical plan.

You can have different medical plans for employees and executives.

Deciding on your medical plan can involve more than just deciding whether to go with an HMO or PPO.  You can also opt to get two different plans for employees and executives at your company.“It's a way for you to keep costs low while also giving people options based on their needs,” says Gaines.It's also a good idea to provide your employees with options (e.g. dental, vision, deductable/ premium level, etc.).  For instance, Gaines and Leo had lots of informal conversations with everyone  here at ChooseWhat.com to get some ideas of what people needed and wanted before they selected a plan that would provide everyone with options.Deciding whether to get a medical plan for your company is a big step, but, according to Gaines, it's not one you should be afraid to take.  “This post is for small business owners just starting out who are still on the fence or are lacking enough information to make a decision,” says Gaines.  “I'm here to say go ahead and pull the trigger, because it's worth it.”Considering your options and keeping in mind the tips listed above will help guide you and your company towards a happier, healthier work life.